Public Bill Committee

[Sir Nicholas Winterton in the Chair]

Written evidence to be reported to the House

PPE 01 The Electoral Commission

The Committee deliberated in private.

On resuming

Nicholas Winterton: We will now hear oral evidence from witnesses from the Electoral Commission, both of whom I most warmly welcome to the sitting. For the record, Peter Wardle and Lisa Klein, will you identify yourselves and your position to members of the Committee?

Peter Wardle: Thank you. I am the chief executive of the Electoral Commission. With me is Lisa Klein, the director of our party and election finance team.

Nicholas Winterton: I think that you have introduced your colleagueunless she would like to say anything else.

Lisa Klein: No.

Nicholas Winterton: Excellent. Before calling the first hon. Member to ask a question of our witnesses, I remind all members of the Committee that questions should be limited to matters within the scope of the Bill. In view of time constraints, I request that both questions and perhaps the answers of our witnesses should be succinct.

Q 102102

Jonathan Djanogly: Good morning. I want to talk about schedule 1 to the Bill, but before doing so I wish to ask whether there are any particular points that the Electoral Commission would like to discuss this morning, because we can address them as well.

Peter Wardle: Thank you. I am sure that members of the Committee will want to ask us about a number of items. There are two particular areas on which I hope to give the commissions views, the first of which is our concern about the proposals on the composition of the Electoral Commission, in that the Bill has departed significantly from the recommendations of the Committee on Standards in Public Life. Secondly, I am sure that we shall be asked about it, but we certainly want to talk about the concerns that have been raised about the proposal in respect of the commissions investigatory powers.

Q 103

Jonathan Djanogly: Right. That is a fitting point on which to start. In terms of size, schedule 1 takes up well over half of the Bill, so it is an important part. There is some confusion about who actually prepared or wanted what has now become schedule 1. Some of it clearly comes from the Political Parties, Elections and Referendums Act 2000, some seems to have been proposed by the Electoral Commission and some seems to have been proposed by the Ministry of Justice. It might be helpful if you could go briefly through the schedule and identify the new powers, and say who proposed them.

Peter Wardle: If I may, I shall ask my colleague, Lisa Klein, to explain the current position, the changes and our views on the changes.

Lisa Klein: Schedule 1 and clause 1, with one exception, replicate the current investigative or monitoring powers. Those powers enable us to request documents and obtain explanations from regulated entities, such as political parties, third parties and regulated donees. The current powers under PPERA also provide for us, in our monitoring role, to enter premises on notice to inspect documents relating to financial information. That is limited at present to political parties, third parties and permitted participants in the context of a referendum. That is replicated in the Bill, with the one exception that the ability to enter premises upon reasonable notice is extended to all other regulated entities. The provision reflects the current commission role in terms of monitoring and inspecting the party finance regime. It provides the type of powers that one would anticipate having in any inspectorate-type monitoring authority.
Given that the Bill also clarifies and extends the commissions role as a regulator, paragraph 2 of the schedule refers to the powers that we would have in the event that we were wearing our investigative hat. It is subject to the caveat that there is reasonable suspicion that a breach has occurred. We are then into the realm not of monitoring, not of inspecting, but of investigating. In that context, the law is broader in that it enables us to obtain information and documents, and to have representatives of entities or anyone who may have information relevant to the allegations attend for interview.
The Bill also provides for the commission to obtain a warrant to enter premises to seize documents. In discussions with MOJ officials, what I wanted, given my prior experience as a regulator of party and election finance, was a mechanism so that if we issued a notice and it was not voluntarily complied with, there would be some way for us to enforce it. There are different ways in which that can occur. The one selected in the Bill is the ability to seek, through a justice of the peace, a warrant for entry. In my home jurisdiction it was handled through a notice that would be issued if there was a lack of compliance, and that would be through the judicial process. We would put the arguments to the court as to why there should be an order compelling compliance with that notice, and if that court order was not adhered to, the individual or entity would be held in contempt of court. There are two different avenues and one has been chosen. If there is a preferred alternative, I am sure that we would be able to work with that.

Q 104

Jonathan Djanogly: Can you explain to what extent you differed in approach from the MOJ? You have mentioned having a court process rather than a magistrates process. Are there any other areas that you had a difference of opinion on?

Peter Wardle: May I clarify that? There are two areas where there have been concerns. The first relates to our current monitoring and inspection powers. For example, a time when we use, or could use, those current powers is when we go into the political parties that receive policy development grants, on roughly an annual basis, to audit their documents and records, because we have a duty to assure Parliament that that money has been spent in accordance with the terms of the grant. That is inspection and audit; we do it already and we think that the current powers are adequate for that.
The first major concern that we have heard is about the extension of the power to enter to inspect documentsin that context, two regulated doneesand we are open to arguments about that. We feel that the current powers are adequate to do the job we need to do regarding inspection. One can see why, for completeness, the powers have been extended, but we are not convinced that we need those powers. If Parliament were to have concerns about that particular aspect, we would be relaxed provided that the current powers are preserved so that we can continue our inspection and monitoring role.
The second area of major concern is the one that Lisa has just explained, which is the mechanism for securing compliance with a reasonable request from us when we are undertaking an investigation. The mechanism in the Bill is essentially that if somebody refuses to answer our questions, we apply to a magistrate to go with a constable and see if we can find the answers for ourselves. That is one approach, but there are others. Lisa mentioned the approach in the United States, which would be to ask the courts to order someone to answer the question, provided that the courts were satisfied that the request was reasonable. Either of those would be fine from our point of view.

Q 105

Jonathan Djanogly: A number of people are asking whether the proposed powers will be justified. Do you think that they are justified in terms of the number of people on whom they are likely to be used? Also, how will the commission be held to account for the decisions that it takes with the new powers?

Lisa Klein: With respect to the first question, I do think that they are warranted. If you are to create a credible regulatory regime, you need to have the power to require information in instances when the need arises. I should step back for a moment and say that our philosophy, and my approach, is that in the first instance we want to provide really good advice and guidance so that we do not get into the situation of having to investigate potential breaches. Shy of that, if we do have something that we have to investigate, we should do so in a voluntary way to the extent that that is possible. Shy of that, we should have resort to notices of more formal nature, and there should be a mechanism in the regime for seeking enforcement of them. The UK system is very good generally, and we want the system to be able to apply in all instances. That was the first question. And the second

Peter Wardle: The second was about how we would be held to account for our use of the powers.

Lisa Klein: There are a couple of mechanisms. Within the legalistic framework, we would always be subject to judicial review if, in the exercise of that power, it was felt that we had stepped beyond the mark.

Q 106

Jonathan Djanogly: Right, and through parliamentary scrutiny? Could you explain to the Committee how that works?

Peter Wardle: The Bill provides in general terms, although principally in relation to the provisions on civil sanctions elsewhere, that we should consult on and publish guidance on our entire enforcement policy for those whom we regulate. That is the first point. We would certainly intend to make that guidance as full and as clear as possible, because this is a change of the regime.
We would certainly consult the political parties and interested people in Parliament. For example, I would be very surprised if the Select Committee on Justice were not to take an interest in that approach. Before we can begin to use any of the civil sanctionsI am talking about the civil sanctions aspect of the Billthere has to be an order in Parliament in relation to each category of those sanctions. So at each stage, before we can start to use any of the new sanctions, there has to be parliamentary scrutiny. I am sure that Parliament would want to examine the extent to which our consultation on the guidance on our approach had been welcomed or opposed by the people whom we had consulted.
The main check on our use of our investigation powers is through the judicial system rather than the parliamentary system, because we are acting as a regulator. I think that that is the appropriate approach. The judge has to be satisfied if we apply for enforcement of our investigations, and people can always appeal through the judicial review process if they think that we are behaving wrongly.

Nicholas Winterton: Mr. Djanogly will have one further question, then I will call any other member of the Committee who wishes to ask a question on investigation powers, so that we can deal with this tidily. Then I shall move on to David Howarth, who wants to ask questions on triggering.

Q 107

Jonathan Djanogly: Thank you, Sir Nicholas. If I can stick to parliamentary scrutiny for my final question, are you saying that you think you should be more responsible to the MOJ on this matter rather than the Speakers Committee? There will be concern among Members of Parliament that these new powers, which are extensive, will be adequately reviewed by Parliament on an ongoing basis. When you have made a decision that hon. Members want to question, how do you see that going through the system?

Peter Wardle: I am absolutely not saying that the commission should be responsible to the Ministry of Justice. There is a good case for the Justice Committee being interested in the work of the commission, as it is already. We have appeared before and given evidence to the Justice Committee on a number of occasions in the past.
The commission is, as you say, accountable in Parliament to the Speakers Committee. That important principle needs to be adhered to carefully in anything to do with the commission. Parliament deliberately set up the commission not to be responsible to the Government, but to Parliament, through the innovation of the Speakers Committee. I think the Speakers Committee, over the four years in which I have had dealings with it, has increasingly seen its role as exercising scrutiny of the commission. I welcome that. It is important for the commissions reputation, as well as for Parliaments, that there is seen to be proper and close parliamentary scrutiny of the commissions work.
I would have no difficulty explaining our approach to the use of investigation powersindeed, our whole enforcement policyto any Committee of the House of Commons, including, certainly, the Justice Committee or the Speakers Committee. I should say that, in general, the Justice Committee has taken the lead on the policy issues relating to the commissions work and the Speakers Committee has done so in relation to the commissions broad priorities and resourcing; it would be more likely to be the Justice Committee.

Q 108

Tony Lloyd: I will want to return more generally to themes in clauses 8 and 9 and sources of donations at a more appropriate stage, Sir Nicholas.
Specifically in the context of investigation, may we have some comments on the Electoral Commissions own views in the paper that it sent to us? Paragraph 20 discusses the changes in the audit process with respect to donors and unincorporated associations. In this regard, specifically, the commission argues that these changes will not add materially to transparency. Have there been instances where the lack of investigation powers has prevented the removal of the veil of the unincorporated association or discussion of the vexed question of foreign donors? Are investigation powers enough now? Will the new powers make this a more straightforward process?

Lisa Klein: Without the new donation transparency requirements as set forth in the Bill, in the context of an investigation under the current set up, we do not have the authority to require documents or to obtain information from individuals. So in the context of foreign donations, in the abstract, if we were to investigate that type of matter we would be doing so at the discretion of the voluntary co-operation of the donor in providing the information. Under the new Bill, it would go further than that. If we had a reasonable suspicion that there was a failure to comply with the law, in terms of the ban on foreign donations, we would be entitled to pursue that through a formal notice and to ask those questions of the donor.

Q 109

Martin Linton: I want to ask about the provisions, both in the existing Bill and the new Bill, to deal with unintended errors. Obviously, the main part of your work is searching out intended deceit and corruption, which is important, but equally it is important to know how the commission deals with honest mistakes, when it comes across them. As I understand it, section 167 of the Representation of the People Act 1983 allows people to seek relief if they make an honest mistake. Should there not be a similar provision in your investigative powers? If you come across a case where you do not believe that there was any intention to deceive or to fail to comply, but nevertheless a mistake was made, will you have sufficient latitude under the Bill to say that because there was no intention to deceive, you do not need to proceed?

Lisa Klein: It is difficult to answer that in the abstract because different offences require different levels of intent, and some do and some do not. However, the Bill is helpful not so much in respect of investigative powers but in determining an outcome within loose groups of sanctions. It is precisely because of the large number of inadvertent or negligent errors that it would be better and more appropriate to address them through the suite of sanctions that are available in the Bill. The goal would be to ensure that political parties systems are robust enough to meet their obligations and to address the minor administrative errors that occur.

Q 110

Martin Linton: You are saying that a sanction is necessarily appropriate if there is an unintended error. Surely, for many unintended errors, you would not want a sanction.

Lisa Klein: Obviously, that is true, but a sanction may be a compliance order or an undertaking to revisit some of the systems. I am using sanction in terms of our ability to suggest that some corrective action could be taken to prevent a recurrence of an administrative order.

Q 111

Andrew Turner: What penalty or sanction will you be evidencing? Will it be a criminal action or a civil action?

Lisa Klein: Under the proposed law, there are civil sanctions that will apply to criminal offences. There are safeguards within that, in that we have to operate to a beyond reasonable doubt standard before we impose civil sanctions.

Nicholas Winterton: We shall now move on to triggering, and I call the Liberal Democrat spokesman.

Q 112

David Howarth: Thank you, Sir Nicholas. Clause 10 proposes to bring back the system of triggering so that instead of there being a clear date for when election expenses start, there will be different dates for different people depending on whether they behave like candidates. I believe that you said in September that it is important in this area for lines to be drawn clearly in legislation, otherwise there will be great scope for confusion and avoidance. The last time we had this type of rule, many people said that it was unenforceable because it was so unclear.
What is your view of the present state of the Bill? How clear is it, and to what extent will you have to give supplementary guidance, as you are invited to do in the Bill, before the measure can effectively be put into operation?

Peter Wardle: Before I say anything else, it is well known that the commission has taken the view that the current trigger point is undesirably close to the date of a general election. We put forward a proposal to extend the period to four months before the general election, acknowledging that that was not a perfect solution. The matter was debated extensively when the Electoral Administration Bill was under consideration in 2005 and 2006, and, for understandable reasons, Parliament concluded that there may well be a better way of addressing the general concern about the very short period for candidate expenses to be regulated in the run-up to a general election.
The proposal in the Bill, as one of the witnesses who will appear later today characterised it, moves from a single trigger point to 650 trigger points, multiplied by how ever many candidates appear. Clearly, from the point of view of regulators, candidates and agents, that does not fill us with joy, in terms of our ability to be very clear about the precise circumstances that will apply in each case and also our ability to follow up any potential infringements.
In passing, I should say that, of course, it is not just the Electoral Commission that gets involved in these offences, because they are Representation of the People Act 1983 offences and not offences under the Political Parties, Elections and Referendums Act 2000. Local police might also take a view on whether or not the law has been broken.
So, in general terms, when we looked at this issue previously it was for that reason that we suggested a single trigger point, but we also suggested that one further away from the date of the election would be preferable all round, because it would be clear.
However, we have made it very clear that it is for Parliament to determine the right way forward on this matter. As a good regulator, we will always seek to provide as much guidance and clarity as we can about what must be done to comply with the rules, as set out in clause 1, and what, if anything, we would like to see in terms of best practice beyond basic compliance with the rules.
We will do our best to produce guidance that is helpful. I am sure that we will have to update that guidance on a fairly regular basis, to take account of new issues that are put to us or new developments that emerge. It will be available to candidates, agents and others to help them to interpret the rules.
As the Secretary of State said when he appeared before the Committee on Tuesday, there is some history and some case law in this area, although not all of it is directly relevant because things have changed since the regime that was previously in place.
I should also say that, of course, Electoral Commission guidance will not overrule a decision of the courts. There are very few judgments in this area and people will not be able to rely conclusively on our guidance at any stage. Ultimately, it can all be tested in the courts.
For that reason, we have made the comment consistently since the Bill was published that the clearer that Parliament is about what it intends to achieve with the Bill, the easier it will be to provide the guidance and the easier it will be to comply with the rules. A number of questions have been raised in this Committee and elsewhere on particular situations and how the rules would apply to them. Those situations are very good examples of the sort of things that we would want to address in guidance. However, I could not sit here today and say that I am confident that we will be able to produce an absolutely clear answer in 100 per cent. of those situations. We will certainly do our best.

Q 113

David Howarth: On the assumption that the Bill stays as it is, how long do you think that it will take to produce the best guidance that you can produce in the circumstances, after the Bill becomes law?

Peter Wardle: There are lots of questions about the Bill at the moment. We are already beginning to try to work out what our guidance would look like and we would hope to have that guidance in the public domain by January. I do not think that it is possible to get anything useful and in detail in the public domain before then. I have said to Members of the House elsewhere, when I was asked this question before, that I would certainly hope that we would be able to finalise the guidance as soon as possible after Parliament has finished its consideration of the Bill, and that, subject to the number of last-minute changes, the responses that we receive to consultation and so on, we would certainly aim to finalise the guidance and make it available to people in a definitive form, as far as we are concerned, as soon as possible. We definitely welcome the indications that the Secretary of State gave to the Committee on Tuesday that he was considering trying to align the date on which the new provisions bit with our ability to get properly consulted guidance into circulation.

Q 114

David Howarth: The Secretary of State said that one of the reasons why the situation was clearer now was that the law had changed on what counted as an expense. Does that help you to issue the guidance or does it make it more difficult because, in a way, it wipes out the previous case law?

Lisa Klein: I would tend to agree that the earlier case law becomes more questionable, and therefore some of the guidelines become less reliable.

Q 115

Eleanor Laing: Continuing on the same subject, on Tuesday, the Secretary of State seemed to agree with the Committee that unclear law is bad law. He appeared to suggest that the relevant part of the Bill would not come into effect until after the Electoral Commission had produced its guidelines. That puts an enormous onus on your organisation. Given the current lack of clarity in the Bill, do you have specific recommendations for improving the drafting, so as to make your task of producing clear guidelines more possible?

Peter Wardle: In the written memorandum that we submitted to the Committee, paragraph 25 gives a couple of specific examples of things that would help candidates and the regulator if they were written more clearly into the Bill. Those issues have already been discussed. The current provision is very general.
We mentioned two issues. One was the question of a candidate who is already selected at the time that the provisions kick in. The Secretary of State made it clear that the intention of the Bill was not to count back. However, there are other questions about a candidate who might have stockpiled election literature which they then bring into use after the triggering point. In such cases, we would need to look at how much of the cost of producing that literature is picked up when it is deployed, as opposed to the cost of producing new literature.
There is also a question about the general promotion of an individual candidate. Every Member of the House who commented, leapt upon the point that in the previous situation, people found ways of talking about themselves without mentioning their names. That is a tricky problem that guidance might not resolve.

Q 116

Eleanor Laing: Thank you for that. We are also concerned about the retrospective nature of the Bill. Last Tuesday, the Secretary of State clearly told the Committee that it was not his intention for the Bill to be retrospective, and he agreed in principle with the point that retrospective law is bad law. As the Bill stands, do you think it likely that there will be a retrospective effect if it goes through? It might not be the intention of the Secretary of State, but will it be a fact arising from the Bill?

Nicholas Winterton: This is interpretation, Mr. Wardle.

Peter Wardle: I will choose my words as carefully as possible. Given the concerns about the impact of the provisions on candidates who have already identified themselves as such before the date on which the new provisions commence, it might be helpful for Parliament to put beyond doubt the question of how those situations will be affected by the Bill.

Q 117

Eleanor Laing: Thank you. That is very helpful. If we take that a step further and consider the Bills possible retrospective effectwhether intentional or notI am also concerned about its disproportionate effect. If our democratic process is to be respected, it must be seen to be fair. It would also appear that, if the Bill in its current form becomes an Act of Parliament, candidates will be disadvantaged by comparison with sitting Members of Parliament. Is it possible that a situation could arise whereby a candidate could be deemed, at the point of triggering, to have already spent to the extent allowed for election expenses, and would therefore not be able to campaign at all during the election period?

Peter Wardle: The answer to that question depends very much on the answer to your previous question. One interpretation of the Bill clearly says that the spending of the candidate who declared before the proposals in the Bill take effect would be caught. I do not think that that is the Secretary of States interpretation. My understanding was that he was seeking to say that, effectively, the clock starts in such cases when the Bill comes into effect. However, given the lack of clarity, as I said before, that seems to be an area where it would probably be helpful if Parliament were able to put beyond doubt the answer to that question.

Eleanor Laing: That is very helpful. Thank you very much.

Q 118

Alan Reid: To pursue the last question, the Bill talks of expenses being incurred. What is your definition of incurred? For example, what if a candidate contracted with a printer for, say, four leaflet runs for the whole constituency and paid before Royal Assent? If the money was handed over before Royal Assent, would that be a loophole in the present wording of the Bill?

Peter Wardle: That is one of the areas in which we have said that there needs to be more clarity. Certainly, if you look at our guidance on the existing rules on candidate expenditureif it would be helpful, I could make available to the Committee the relevant extractsthe question of accrual versus cash accounting is relevant.

Q 119

Alan Reid: Existing legislation allows you to recommend increases in the expenses limit. If the Bill is passed, so that expenses limits cover a much longer period, would you recommend an increase in the expenses limit? If so, have you given any thought to what that would be?

Peter Wardle: We would certainly recommend an increase in the expenses limit, in principle. When we recommended that serious consideration should be given to a four-month period, we made such a recommendation. I am afraid that I cannot remember whether we gave a precise figure, but we certainly said, broadly speaking, that, if quadrupling the period, it would be foolish to stay with the existing limit. We would have to acknowledge that this was over a longer period. May I just add to that? It is slightly more difficult to come up with a number if you are talking about an indeterminate period. The beauty of the four-month period was that it was clear.

Q 120

Alan Reid: Finally, in paragraph 25 you raised the problem of transport, and how that could be apportioned for election expenses. To give you an example from my own constituency, as a sitting MP, I fly out to one of the islands to hold a surgery and, while I am there, distribute some leaflets about voting for me at the next general election. The literature itself is clearly election expenses, but how do you apportion the travelling expenses? If my main purpose for going was to hold a surgery but, in addition, while I am there, I incur election expenses, how do you apportion the travel?

Peter Wardle: That is a good question. It is not a question particularly triggered by the Bills proposalsthe question arises already, if in the regulated period.

Alan Reid: Only in the regulated period.

Peter Wardle: Yes. We have guidance. It is not easy, and we have attempted to address that question in our existing guidance. I am afraid that I do not have that, chapter and verse, but we can follow that up in a note to the Committee.

Alan Reid: Thank you.

Nicholas Winterton: Two hon. Members wish to come in on this subject, and I want to help the Committee. We have three other important areas to cover: the composition of the commission, donations, and registration. Will hon. Members who wish to ask a brief question under this heading of triggering do so quickly?

Q 121

Tony Lloyd: This relates back to ambiguity about the timing of the impact of candidacy. I have been surprised by Peter Wardles remarks so far, because clause 10(5) on page 9 states:
The amendments made by this section do not apply to any expenses incurred before the commencement of this section.
Is there really any ambiguity in that?

Peter Wardle: As Sir Nicholas noted, I was being invited to give an interpretation of the law. I carefully sought to avoid doing that. What I said was that there is more than one interpretation. I heard what the Secretary of State said, and it seemed clear to me, but some people are unpersuaded and there are one or two issues. The one that Mr. Reid raised about contracts entered into but not dischargedthe standard periodmay be one on which it would be helpful to have the position clarified. It is a transition issue, and when something is introduced you sometimes need transitional measures, perhaps simply to put something beyond doubt rather than to change something in the original Bill.

Q 122

Eleanor Laing: Has the Electoral Commission made any assessment or comparison of the effectiveness of recent general elections when there was a triggering mechanism, and when there was not? In the recent past, we have had general elections when there was triggering, as you mentioned, Mr. Wardle, but during the last two there was not. Has there been an assessment or comparison of the effect of that?

Martin Linton: It was written by Lord Ashcroft and called Dirty politics, Dirty times.

Nicholas Winterton: Order.

Peter Wardle: The short answer is no.

Nicholas Winterton: Thank you. May we now pass on to the commissions composition? I call, first, David Howarth.

Q 123

David Howarth: The commission has expressed concern about the proposal to add to the commissioners some who would be exempt from the normal rule that people involved in politics recently cannot be commissioners. I think there has been some change of emphasis or change in the way that the commission expresses its objections, so will you put on the record your present thoughts on that proposal?

Peter Wardle: The first point is that the commission understands and endorses the underlying aim of the proposals. Its work should be informed by a clear and current understanding of how political parties work. There can be no question about that. We very much welcome in principle the ability to employ staff with more recent involvement in party politics than the current 10-year ban allows, although we think the blanket relaxation to one year, except for the chief executives post, may go too far. For example, I am not sure that all political parties would welcome the appointment as director of investigations someone who, 18 months previously, was closely identified with one political party or another. However, if that is understood, the commission can make its own sensible decisions on when it takes advantage of the relaxation on staff and when it does not.
My concern about the proposals for the commissioners is where the proposals in the Bill have departed from the principles set out by the Committee on Standards in Public Life in its report on the commission. First, there have been frequent references to the fact that new commissioners nominated by party leaders will always be in a minority. In that context, neither the CSPL nor anyone else recommended, before the Bill was introduced, that there should be a reduction in the current 10-year ban for the other commissioners who are not party nominees, yet clause 7 reduces the length of that ban from 10 years to five. In principle, that means that, of 10 commissioners, you could have four who were MPs a year ago and six who were MPs five years ago. That seems to be a significant departure from the principle of introducing political experience to the commission that the CSPL set out, and it gives me some concerns about the extent to which the balance between independent commissioners and political nominees will be maintained.
I am sure that people will say that I have painted an extreme scenario, that that would never happen, but it seems that that is the effect of the Bill. I have not yet understood the rationale for the reduction from 10 years to five years for the non-politically nominated commissioners, alongside the introduction of party nominees. That is my first point.
My second concern is that the CSPL clearly said that the process for appointing commissioners with recent political experience should somehow reflect the provisions of the code of practice for public appointments. It is difficult to see how the process set out in the Bill does that. The point to note is that, up till now, the Speakers Committee has consistently taken the view and insisted that the process for appointing electoral commissioners should be clearly in line with the code of practice for public appointments. I suppose that I am making a plea on behalf of the Speakers Committee, which gets the job of implementing this, for Parliament to be as clear as possible about expectations for the appointment process so that there is no confusion, and so that people do not try to invent a process that is different from what Parliament wanted.
Thirdly, a more technical point: it seems that there is no provision in the Bill to deal with the possibility that one party or another might fail to nominate. That does happen from time to time when parties have the right to nominate to organisations. If that were the case, there is a risk that the Speakers Committee could find itself in quite a dilemma, because, without a nomination from a party, or from more than one party in some cases, it cannot get on with the next stage of the process. That is a procedural point, but it would be good to consider it.
Those are my main concerns. It is important that Parliament thinks about them rather than simply sending the measure through on the nod, because your colleagues on the Speakers Committee will be given the job of implementing it.

Q 124

David Howarth: On the first concern, which is the reduction from 10 to five years for the non-political commissioners, the response that has been put to me is that since those appointments will still be Nolan appointmentswe are talking about the code of practice for public appointmentsthe situation is not as dangerous or as risky as you are saying. That will be taken into account in the appointment procedure, and it will not involve the new rather awkward process that you described for the appointment of political commissioners through the Speakers Committee. How do you respond to that?

Peter Wardle: Yes, provided all of that happens, but there is nothing in the Bill to ensure that it does. As I understand it, the decision to follow the Nolan process is a decision that the Speakers Committee has consistently insisted on, and that is absolutely right, but I am not sure that the Bill mandates that for the other appointments. What it does is reduce the disqualification that currently applies on the basis of party political involvement from 10 years to five years.

Q 125

Tony Lloyd: I would like to turn specifically to clauses 8 and 9, which deal with the source of donation. For the record, may I ask a simple question? Does the commission consider that it has a primary duty to encourage and insist on transparency of the ultimate donor?

Peter Wardle: Yes.

Nicholas Winterton: By the way, we have moved on to donations.

Tony Lloyd: Yes, I did say that, Sir Nicholas.

Nicholas Winterton: But I was under the impression that you wanted to come in under composition of the commission. So, for the information of members of the Committee, we are on donations.

Peter Wardle: If I may just add to my answer, yes, so far as the law requires it. We cannot insist on transparency or disclosure of identity beyond what the law requires. That is self-evident.

Q 126

Tony Lloyd: Indeed. The commission in its paper to the Committee states:
We welcome the Governments decision to look beyond unincorporated associations,
but you go on to say that
the benefits of these proposals may be quite limited, since the law already prohibits concealing the source of a donation by channelling the money through others.
You then say that they are effectively restricted because
the new declarations which donors are to be obliged to provide to donees will not be sent to the Commission or made public.
With unincorporated associations, such as dinner clubs, it is difficult or impossible for the commission to bring transparency forward. You are saying that, as drafted, the Bill does not do enough to allow you take away the veil that restricts public knowledge of the ultimate donor. What powers do you seek that would allow you to strip away the veil provided by incorporation or the dinner club structure?

Peter Wardle: It is not a question of the commissions powers, but of changing the framework that we regulate. Currently, whatever my powers, I can only require and investigate allegations of non-compliance with the law as it stands. As everyone knows, the purpose of clause 8 is to underline what the law currently requires and ensure that, in the transaction between donor and recipient, that point is specifically addressed, but it is only the point that is currently in the law. If Parliament wanted to go beyond it and change the law, we would be getting into the much bigger area of how wide the net of transparency is cast, and that goes back to the debates that the House had on Second Reading and in some of the evidence sessions involving the Secretary of State on Tuesday about the extent to which Parliament wants to change the underlying framework that we regulate. Whatever powers we have will make no difference if the underlying law stays the same.

Q 127

Tony Lloyd: But there is a question of power. At the moment, if an agent operates on behalf of a unincorporated association, he has a duty under the law to say that the donations comply with the law. There is no ambiguity in the law about that. You are saying that we need to change the nature of the total structure to require an agent to declare, for example, that the donations are legitimate and within the law, such as that the donors are UK nationals and comply with the donation limits. What would you need to pursue that matter?

Lisa Klein: Currently, with unincorporated associations, the law of agency applies if the donor is a friend of party x and is saying to the unincorporated association, Please give this donation to party x or to candidate y. It is set out in legislation that the agent is required to disclose to the recipient party or candidate the identity and details of the source of the donation. That is then reported by the party in reports and returns filed to the Electoral Commission.
However, under the law of agency as set out in the Bill, there is a spectrum and, at the other end of the spectrum, a lot of broad discretion might rest within the unincorporated association for deciding to whom the donation is made and the amount of the donation. In that case, under those basic principles, there would not be an obligation because the unincorporated association is making the decision about the disposition of the funds. We could envision a framework that changed that to the extent that it required greater transparency of funds received by the unincorporated association, but that is not how the law is set up under the Bill.

Q 128

Tony Lloyd: Specifically, would the Electoral Commission seek that change in the law to strip away the scale of unincorporation?

Peter Wardle: The commission has not expressed a view that the law should change. That is because, until very recently, all those issues were effectively up for grabs, in the context of the inter-party talks on party funding. Frankly, we did not think that the commission would necessarily be listened to terribly hard, although we were consulted by Sir Hayden Phillips to see whether we would pick out particular issues.
To the extent that a wider solution has not emerged from those talks, clearly there is a range of areasyou have mentioned a couple of themwhere there is a case for changing the rules. However, I acknowledge that this is a difficult issue, about which the Secretary of State for Justice and Lord Chancellor, as well as the Front-Bench spokesmen of the other parties, have all expressed a wish in principle to proceed by consensus.
On the particular issue of the unincorporated associations, as Lisa Klein has explained, the difficult element is where there is a grey area about who took the decision on where the money would go. There have been suggestions mooted that there should be some concept of where the controlling mind of the unincorporated association is, which takes the decision on where the money goes. In principle, that would lead to greater transparency in the area that you are talking about, but it is not without its pitfalls.

Q 129

Tony Lloyd: But to be clear, what you are saying at the moment is that an unincorporated association could have the doubtless unintended consequence of totally disguising the fact that the ultimate source of a donation was one that would not be permitted if that donor gave the money directly to a political party.

Lisa Klein: I am sorry; I did not fully hear the question.

Q 130

Tony Lloyd: I am saying that the consequence of the way that the law would stand even if the Bill was passed would be that an unincorporated association could be a channel so that money could go to a political party, which, if given directly by the ultimate donor, would not be permissible under our laws.

Lisa Klein: I do not fully subscribe to that view.

Q 131

Tony Lloyd: How could that not be the case?

Lisa Klein: If the unincorporated association was used as a device with an intent to channel money that would otherwise be impermissible, it would be in violation of section 61 of the Act. The Bill does some very significant things in terms of improving our ability to investigate such a violation; in fact, such a violation would be subject to the extended investigative powers in the Bill.

Q 132

Tony Lloyd: I have a final question, which is almost about the area that Lisa Klein has just taken us into. You said in an earlier answer that the investigative powers that you have are not adequate. On the problem of the unincorporated association and the question of the foreign donorfor example, whether the foreign donor is registered in the UK for tax purposes or for elections, which of course would mean that they were a permissible donorwill you have enough powers after the Bill has been passed properly to investigate allegations of impropriety in both those cases?

Lisa Klein: The short answer is yes. The slightly longer answer is yes, but we will have to work within the untested framework of the definition of carrying on business etc., which is incorporated in the current law.

Nicholas Winterton: We have approximately 20 minutes left. On the issue of donations, three other Members have caught my eye and want to ask questions: Andrew Tyrie, whom I will call first; Martin Linton; and Mr. Djanogly.

Q 133

Andrew Tyrie: I think that, perhaps inadvertently, a large part of what I wanted to ask has already been answered in your response to questions from Tony Lloyd. We are at one in wanting to ensure that these intermediaries are not permissible and cannot be used. The question is, what framework of law is most appropriate for dealing with them?
I would like you to summarise your views. What you are saying is that the proposals will not extend the existing legal restrictions and will not add materially to transparency, but they will impose an extra large compliance burden. Is that correct?

Peter Wardle: Yes, I think that summarises what we have said in the written memorandum, which is our view on the clause.

Q 134

Andrew Tyrie: Therefore, is the clause worth the candle?

Peter Wardle: That is a decision for Parliament. We are more concerned about its impact on political parties than on the Electoral Commission. Most activity that the clause will require involves a transaction between parties and their donors. I am aware that all three political parties have raised concerns about the burden of complying with the clause as drafted.

Q 135

Andrew Tyrie: But it sounds like you would not dissent from the summary that, in a nutshell, the clause is at best a waste of time.

Peter Wardle: Those are your words. Our words are in the written memorandum to the Committee.

Q 136

Andrew Tyrie: While I have the floor, may I quickly ask you for a piece of information about an issue mentioned earlier, which I have been thinking about? Perhaps you will send it to us in writing. You said that the triggering rules will generate a huge extra administrative burden by creating 646 bodies that will need to be monitored, as opposed to one. Can you give the Committee an estimate of the administrative burden generated by the existing law and let us know, in cost terms, what that will rise to as a consequence of the implementation of the proposals?

Peter Wardle: I will be happy to attempt something like that with the caveat that we look directly only at the impact on the Electoral Commission. As I said earlier, the other factor to consider is the extent of the impact on candidates and agents.

Andrew Tyrie: Sir Nicholas, I have questions on individual registration, but perhaps we shall come to that later.

Nicholas Winterton: Mr. Wardle, if you feel that you would like to answer Mr. Tyries questions with a written submission that perhaps gives rather more information than you have been able to provide off the cuff, the Committee would be pleased to receive it.
We now move from Mr. Tyrie to Mr. Linton. We want to get registration in, so I hope that the questions from you, Mr. Linton, and from Mr. Djanogly will be relatively succinct.

Q 137

Martin Linton: I want to understand exactly how clause 8 will work and I am not quite there yet. In principle, the purpose of the Bill is that the identity of donors who give over £200 should be disclosed. In some cases, unincorporated associations have been used as a device to transfer money without disclosing the name of individual donors. Is that accepted?

Lisa Klein: Donations of over £200 have to be confirmed and verified, and a donor identified so as to ensure that they are a permissible donor, by the party. Then that first part of your statement would be more accurate. In other words, they are not published. A party has the obligation to ensure that any donations over £200 come from permissible donors, and therefore they have to verify the source of the donation.

Q 138

Martin Linton: The identities and names of donors must be disclosed

Lisa Klein: Yes, the figure is over £5,000 for political parties.

Q 139

Martin Linton: Nevertheless, with some unincorporated associations giving well over £1 million, it is likely that there are donors of over £5,000 who use such associations to channel their donations.

Lisa Klein: That is possible. If presented with a factual scenario in evidence of that, or that something had been circumvented, or that the proper information had not been given, or that the donation was working as an agency donation, that is something we should look at.

Q 140

Martin Linton: But the amendment that clause 8 will make is simply that the secretary or chairman of that unincorporated association will have to write a declaration with the names of donors of over £200 and give it to the donee. Is that right?

Lisa Klein: My understanding of the operation of the provision is that for any donation of over £200, the donor will be requested by the recipient to fill out a declaration form that states the identity of the source of the funds. That will then be sent back to the political party, and it will be a requirement in order for it to accept that donation.

Q 141

Martin Linton: And that declaration will then be sent to you?

Lisa Klein: No, it will be retained by the political party, but we could obtain it upon request.

Q 142

Martin Linton: Would you do so?

Lisa Klein: Given the number of donations that might be affected, probably not on a routine basis, but on a for-cause basis, yes.

Q 143

Martin Linton: Do you not think it would be better if all donations of more than £5,000 were disclosed publicly?

Lisa Klein: I have no problem with that, no.

Q 144

Martin Linton: If you receive a declaration from a party showing that there are many donations of more than £5,000 through unincorporated associations, which have not been declared publicly, would you not think it a good thing if you were able to publish the names?

Lisa Klein: Yes. I would go back to Mark Sweeneys evidence to the Committee on Tuesday. The question of agency is factual. If it determined as fact that donations resulted from agency, with the donor donating more than £5,000, that should be disclosed, yes.

Q 145

Martin Linton: Even though it is through an unincorporated association.

Lisa Klein: Under the law, if the unincorporated association is being used as an agent for the actual donor, the publication of donors of more than £5,000 would be required, yes.

Q 146

Martin Linton: Would it not be simpler if, as we amend the Political Parties, Elections and Referendums Act 2000, we wrote that in for all donations of more than £5,000? You would have it within your power to publish the names of such donors, but there could be an amendment so that it was automatic that donors of more than £5,000, even through unincorporated associations, should be identified.

Lisa Klein: There certainly could be ways to extend it. I have left my drafting pen at home, but there are definitely ways that one could extend it if Parliament chose to do so.

Q 147

Jonathan Djanogly: On clause 8, I am just having a look at your October 2008 memorandum. You state:
On the other hand, the changes will impose potentially substantial new administrative burdens on parties and donors. Political parties have expressed reservations to us about the impact of these compliance requirements, particularly on their volunteer officers.
Do you think that the implication of clause 8 could be to dissuade people from wanting to be donors because of the administrative and bureaucratic implications?

Peter Wardle: What we are doing here is bringing to the Committees attention the concerns that have been expressed by the political parties. I am not sure whether I would want to speak beyond that for the political parties. You have an opportunity to ask them yourselves later today. I am simply reporting to you what they have said to us so far, and I suspect that they may say it again if they are asked the question this afternoon.

Q 148

Jonathan Djanogly: I was moving beyond what you have heard from political parties. I was asking whether you have a view on what donors to political parties might think of the proposals.

Peter Wardle: I do not have a direct view on that, because I have not surveyed donors. What the political parties have represented to us reflects conversations that they have had and their views on the likely reaction of their donors, as well as of the parties themselves. I would not seek to interpret beyond what we have reported to you, which is what the political parties have said to us.

Q 149

Jonathan Djanogly: And what did the political parties say to you?

Peter Wardle: The political parties have said to us what is in our note, which is that there are general concerns about the impact of the compliance requirements. The particular issue that they have raised with us is about their own volunteer officers. We have not had any detailed evidence from the political parties about their view on what their donors might or might not think about the clause.

Q 150

Michael Wills: I, too, want to dwell on that point, and perhaps return you to the briefing that you helpfully provided for the Committee. May I first check that you are aware, of course, that the Government have indicated that we are willing to be flexible about the limits? We absolutely accept the need not to overburden volunteers who, in the overwhelming majority of cases, are engaged in a noble voluntary activity.

Peter Wardle: Absolutely. The Secretary of State has made that clear on a number of occasions, and you, Minister, have also made that clear to us. The briefing was written at a point of time, and I acknowledge that things have moved on since then and that they show signs of moving further in the process of the Bills development.

Q 151

Michael Wills: Thank you. May I direct you to the words in your briefing? Under the heading Sources of donations you say that you believe the benefits of these changes will be quite limited. That is not to say that they will have no advantage at all, is it?

Peter Wardle: No, it is not. We would not dissent, being an organisation that has been set up to encourage transparency, from any attempt to underline the requirements on transparency, which is what the clauses are trying to do. What we are saying in the briefing is that you have to set against that the potential disbenefits. In terms of what is in the Bill, we are concerned that the potential disbenefits in practical terms may outweigh the benefits; we are not saying that the whole idea is completely unworkable, but that it is not desirable as it currently stands.

Q 152

Michael Wills: So that we are absolutely clear, I think that we can accept that there is a consensus about the need to strike a balance between overburdening volunteers and dissuading donors from making legitimate donations on the one hand, and ensuring transparency on the other. However, I think that I have just heard you say, although I would be grateful if you confirmed it, that there is merit in measures that draw attention to and focus both donor and recipient on the need to show that they have complied with the law.

Peter Wardle: Yes, that is right. As you said, we do not say that there are no benefits to the measure; we say that there are some benefits. As the Bill is currently drafted, we think that the disbenefits outweigh the benefits, but it may be possible to change the balance of the argument so that the benefits of the clause are achievable without unacceptable detriment to the parties themselves.

Nicholas Winterton: May we move on to registration?

Q 153

Andrew Tyrie: I just want to ask you about individual registration. I am confident that you heard Sir Christophers remarks in our first evidence session, that the introduction of postal voting on demand, combined with the retention of householder registration, generates conditions where the electoral system is fundamentally flawed. I would like you to comment on whether you agree with that conclusion of the chairman of the Committee on Standards in Public Life. What is your view?

Peter Wardle: Yes, we agree with the chairman. The commission has been calling for individual registration in Great Britain since 2003. Lots of other peopleI will not rehearse themhave agreed with us. The Government made it clear when they responded to the report by the Committee on Standards in Public Life that they support the principle of individual registration, but they are concerned about how that could be introduced without significant numbers of people falling off the register.
The case for individual registration is about basic rights and responsibilities for individual citizens and the fact that it is not right, in the 21st century, to maintain an electoral system where the head of household influences who is enfranchised and who is disfranchised. Changing to individual registration with personal identifiers would also deal with the current lack of integrity and confidence in the process. We need a proper system. In our view and in the view of many others, only a combination of individual registration and a system of personal identifiers will provide end-to-end security in the electoral system, because the electoral register is the bedrock of that system.
There are legitimate concerns about the impact on the comprehensiveness of the register if we introduce individual registration with personal identifiers, but in my view we can and should address those concerns and should not make them a reason for continuing to put off the introduction of individual registration and thereby putting off addressing the accuracy and integrity of the register. The two things are not mutually exclusive; they are both problems that need to be addressed. In the commissions viewit has been the commissions view for some years nowa 21st-century modern western democracy ought to be able to address both the integrity and accuracy of the register and its comprehensiveness, but we will make no progress on either of those things unless we get started.

Q 154

Andrew Tyrie: That is a pretty clear answer. Just to make it crystal clear, do you think that there are at the moment any practical or technical obstacles to which you do not readily see a solution, and which might not command general support, that lie in the way of beginning this process of implementation? How long would that process take?

Peter Wardle: I do not think there are any fundamental practical or technical obstacles. The biggest problem is the one I referred to before, about which the Government are understandably and legitimately concerned, which is that eligible people might, for various reasons, fail to appear on the new register. There are many ways of addressing that and we have made it clear what those are. First, sufficient resources need to be put into a public information effort. Probably some things might need to be done that were not done when individual registration was introduced in Northern Irelandprincipally, combining the introduction so that, on implementation, there is some sort of safeguard so that there is not a cliff edge for people in the first year of individual registration to fall off and then that is it; instead, they should be identified as potentially falling off and followed up, because we need their personal identifiers before we move forward.
The second thing is to look seriously at data sharing, so that, for example, if one part of a local authority knows that a family has moved in or out of the authority area, the electoral registration officer should somehow get a trigger to take action on his or her own account to ensure that the register is up to date.
This is a not insignificant change; the commission has never made any secret of that. This is a major change that effectively requires all registered electors to re-register and provide their personal identifiers afresh. That will make the register more secure and will give them an individual stake, in every case, in their electoral registration. There are certain categories of the community who are going to be harder to reach. We need to make sure that enough effort is put into finding them. There need to be safeguards so that people do not fall off overnight. This is not something that can happen immediately.
To answer the second part of your question, we think that if there were movement in the legislation now, the earliest that you could attempt to build a new register on the basis of individual registration would be in the 2010 renewal canvas. Almost certainly you would not have a comprehensive set of personal identifiers from that exercise, and until you have a comprehensive set of personal identifiers you cannot start to use those personal identifiers to guarantee, for example, the security of the voting process in the way that we would like to see. So we are probably looking at a two to three year gradual process until the register is complete and has a much greater degree of integrity, in that there are personal identifiers for each person registered. This is not an overnight fix. I think we are realistic about the time it will take. We acknowledge the concerns that the Government and others have put forward. But our view remains that it is better to get started on it now than to delay things.

Nicholas Winterton: Two hon. Members have caught my eye: David Kidney and David Howarth. If they put a question for a yes or no answer, I hope that one of our witnesses will be able to respond.

Q 155

David Kidney: Mr. Wardle, can we achieve a single registration of donations and benefits to Members of Parliament in place of the current system without changing this Bill?

Nicholas Winterton: That is the first question.

Q 156

David Howarth: To come back to individual registration, you have answered most of my questions, but on one practical point, you would agree, would you not, that there are certain practical difficulties in simply translating the Northern Ireland legislation into Great Britain? For example, the three-month rule that was brought in for a particular reason in Northern Ireland would not necessary apply in Britain.

Peter Wardle: The answer to Mr. Howarths question is, yes, there are problems with simply translating the Northern Ireland provisions. The answer to Mr. Kidneys question is, not quite. Some minor changes are probably needed. That matter is currently under discussion between the Ministry of Justice, the commission and the Standards and Privileges Committee. But the intention is clearly to ensure that most donations to most Members of Parliament for most purposes are no longer subject to the dual reporting problem that we currently face.

Nicholas Winterton: Thank you very much. I am afraid that that brings us to the end of the time allocated for the Committee to ask questions of the Electoral Commission. I thank Peter Wardle and Lisa Klein very much indeed for the way in which they have dealt with our questions; it has been most helpful. Thank you for giving evidence.

It being twenty-five minutes past Ten oclock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at One oclock.